Drivers for the Week of August 24, 2026

The dollar’s decline should stabilize, while softer US labor and inflation data could prompt a dovish repricing even as fiscal risks remain elevated.

• The Treasury’s buyback announcement briefly pushed longer-term Treasury yields lower, but the relief faded; the CBO projects US debt reaching 120% of GDP by 2036, limiting confidence in fiscal consolidation.
• July US headline PCE is expected to rise 0.1% month on month and 3.6% year on year, while core PCE is forecast at 0.2% month on month and 3.3% year on year; real personal spending is expected to be flat.
• Fed funds futures price a 40% probability of a 25-basis-point hike to 3.75%-4.00% at the September 16 meeting and nearly 50 basis points of tightening over the next twelve months, but BBH views the repricing risk as dovish because labor demand is weakening and policy is already restrictive.
• Canada’s Q2 real GDP is expected to rebound to 3.4% annualized from -0.1% in Q1, but 50% US tariffs on nearly $20 billion of Canadian imports, equal to 0.85% of Canada’s GDP, threaten the recovery.
• Australia’s July headline CPI is forecast to slow to 3.3% year on year from 3.8%, while Hungary is expected to cut rates to 5.50%, Thailand to hold at 1.00%, and South Korea and the Philippines to raise rates to 3.00% and 5.00%, respectively.

Takeaway: Investors should expect a more stable dollar and possible dovish moves in US and Australian rate pricing, while trade tensions argue for caution on the Canadian dollar and divergent Asian central-bank policies create selective currency opportunities.